Conveyancing Solicitors and Lenders: The Panel Game
“Mortgage lenders cut lists of “approved” solicitors for conveyancing” ran the article in the Guardian last week.
The issue: whether Banks and Lenders should be able to determine which law firm acts for the Lender in a Conveyancing transaction involving a mortgage.
The balancing act is as follows: a paramount plea for customer choice against better risk management by Lenders to offset increased fraud and to maintain and raise standards
The stark choice for the consumer is either to pay more for their conveyancing by allowing two firms to act in parallel or give in to the Bank and allow their “chosen” conveyancing firm to handle everything.
The issue is not straight forward, but the solution may be rather less so.
Is Lender discrimination against law firms new?
Lender discrimination is not new: Some Lenders have operated a restricted panel for years.
Sole Practitioner firms have born the brunt of Lender discrimination.
The reason trotted out is that compensation for fraud is treated differently by the Law Society. The Compensation Fund is a discretionary fund which may pay out in respect of sole practitioners who have been fraudulent. There is no such discretion needed where the fraud has been by a law firm with two or more partners.
Would continued discrimination by Lenders against law firms be a bad thing?
Standards in Conveyancing vary widely. Standardisation of Conveyancing has been heralded as the only way to make money from conveyancing. As such many law firms have sought to dumb down conveyancing, bowing at the altar of tick box conveyancing on the way.
The days of Solicitor to Solicitor Conveyancing, unless at the multi million pound end of the market, have gone.
Horses for Courses
As a solicitor one can try and tackle any legal transaction or problem.
When I first qualified in the early 1980’s it was the norm for a High Street solicitor to be a jack of all trades.
Conveyancing transactions were held up often, because the other side’s solicitor was in court representing another client.
The legal world has since become more complex. It is now the norm for solicitors to stick to their speciality and not stray in the unknown.
Statistics from the Land Registry reveal that thousands of law firms only carry out one or two conveyances a year.
Why should law firms have the right to be on a Lender panel when clearly, Conveyancing is not their speciality?
To put it another way; would you want a conveyancing solicitor to represent you if you were charged with a crime; probably not.
The Conveyancing Quality Scheme was introduced earlier this year by the Law Society as a direct response to the problem.
In my humble opinion the Scheme was at least 5 years too late coming to fruition; but better late than never.
The criteria for joining the scheme are strict. Law firms must apply annually to continue being part of the scheme
Clearly any law firm applying must be able to “walk the walk” and not just “talk the talk “about their ability to carry out conveyancing in an efficient and risk managed way.
So far over 750 conveyancing firms have won the right to represent themselves as conveyancing specialists and practice under the Conveyancing Quality Scheme kite mark.
It would not take an Einstein to work out that in the future any law firm which purports to carry out conveyancing will be unlikely to remain or get on a Lender’s approved panel.
What will Lenders make of the Conveyancing Quality Scheme?
The Lenders have so far kept their powder dry and adopted a wait and see approach.
It is fair to say they were not going to hang about and their actions in further restricting their panels is a result of their obvious unease.
There is still the issue as to whether the Conveyancing Quality Scheme will achieve a sufficient critical mass to be taken seriously by the Lenders. Time will tell.
Good conveyancing can and is done by law firms regardless of size.
Conveyancing carried out by a large firm is no more a better standard than conveyancing carried out by a small must be somehow compromised.
My firm Clutton Cox is a relatively small law firm but was in the first tranche of law firms to achieve the Conveyancing kite mark.
My firm has not suffered from exclusion form the Big Lenders panels.
I am relieved to have been excluded from some of the secondary and tertiary Lenders whose efficiency and competence have quite frankly been woeful.
In the future, Conveyancing law firms will live or die by their reputation for good standard work, efficiency, speed and a high commitment to client care, both individuals and Lenders alike.
The Conveyancing Quality Scheme is now an additional marker for consumers to separate the wheat from the chaff in the conveyancing world.
Lenders too will now have the ability to discriminate in a more sophisticated and positive way as to which law firm should have the privilege of being on their Conveyancing panels.
The panel game for Conveyancing solicitors may be heading for its proper denouement.
Credit: Photo via www.wideopenmag.co.uk